Global Chip Sales Buoyed by Phones, Memories

LONDON -- The three-month average of global chip sales is likely to be reported at $23.9 billion for May, versus $23.62 billion in April, Bruce Diesen, an Oslo analyst for Carnegie Group, told EE Times in an email.

Diesen's figure would show a strong improvement in the chip market, which the analyst puts down to early production runs of numerous smartphone models and an across-the-board rise in the price of memory components used in smartphones and personal and tablet computers.

The Semiconductor Industry Association usually reports the three-month average for May global sales (as compiled by World Semiconductor Trade Statistics) early in July.

Adding supporting evidence to his prediction, Diesen said that chip exports from South Korea hit a record high in May, and that was only partly due to rising prices for commodity memories. Taiwan produced a similar increase in technology exports in May. Though it did not quite hit record levels, with monthly technology exports of more than $10 billion, Taiwan is a good indicator for the technology sector overall, he said.

Despite the strong run in May, data from Samsung points to slower handset numbers (at least for Samsung) in June. For this and other reasons, Diesen is still not particularly bullish about the full year, and he is sticking to his prediction that the global chip market will contract 1 percent in 2013.

Interesting. The big untapped markets seem to be the developing countries that have some of wireless infrastructure in place but people can't afford a $100-$200 mobile phone. Samsung and Apple are going to have to react or leave the door open to other players.

But anecdotally I am hearing that the tide is starting to turn against prestige brands because of the massive sales of entry-level and medium-level smartphones and tablets in the developing world.

In essence we are getting to the point where everyone who can afford and wants an iPhone or Galaxy S has been sold one. The people left who haven't been sold one but want one find it hard to justify the cost but ARE buying lower priced alternatives.